Tuesday, September 11, 2007

Look closer at the Risk Ladies and Gents

Given the last couple of months of turmoil in the Finance Company sector and the recent scrapping of the Yellow Pages Bond issue, one might expect companies looking to issue more debt would be a bit clearer in their advertising than they possibly would have before all this mess kicked off.

A current case in point is the offer by Origin Energy, the Australian majority owner of New Zealand' s Contact Energy(CEN)

In their advertising the preference share offer , Origin make no reference to the BBB- rating for the debt, one step above "junk" status and the 10% gross they are currently offering is too low for the risk that investors will be taking if they accept the offer.

To gauge what might be a fair return for potential investors one would only have to look at the offering by the local office of the Dutch giant Rabobank.

Rabobank are asking for $NZ400 million or more in a bond issue that will carry interest rates at between 9-9.25%. The advantage of the Rabobank offer though is that the bonds issued will be rated AA+ and the parent bank is rated AAA.

By comparison the risk potential investors in Origin's Preference share issue are taking is not reflected in the interest rate offered.

I must repeat what I have said in a previous column about the Origin share offer. Those that are pushing it, ASB Bank and ASB Securities are desperate to palm this issue off to mum and dad investors.

Issues like this one, with big names behind them, make them look safe and less risky, in the face of the last few weeks of collapsing finance companies. They could be just as risky.

I have been hassled 3 times by sweaty bankers and pimply brokers to buy these pref shares and do not recommend them to others.

You have been warned :)


c Share Investor 2007

Lest we forget 9/11

Not much has been written, in New Zealand, about those Americans that fell on September 11, 6 years ago. Our Labour politicians no longer consider Americans our friends and actively encourage those that are our enemies to make New Zealand their home.

The world changed on that day. The West is in constant fear of those that would force their way of life on us and we are reminded everyday when we watch what is unfolding in the Middle East, about what would happen if our freedoms were taken at the point of a gun or homicide bomber.

Those that are fighting the good fight in Iraq must be given the hero status that they deserve, for that is what they are. Heroes.

I give my thoughts to those that lost their lives on September 11 2001 and for those lost in Iraq and elsewhere who fought and are still fighting to keep our way of life the way it is.

Lest we forget.

c Darren Rickard 2007

Labour's State Control out of control

In the latest grasp by Helen Clark and the sisterhood for full state control of every New Zealander we see the Government apparatus, the Children’s Commission and its head Cindy Caro make another play for the control of the nations children.

Caro has put forward a lunatic idea that every child from new-born to 15 years old will be "tracked" by the state. What that means is visits from state appointed workers who will check on the child’s "wellbeing" and make sure that you as a parent are doing what you "should be."

If the parents of a child refuse Government employee’s access to the child, the child can be removed and placed in State care!

The absurdity of the idea is a smack in the face for the majority of families who look after their children well. Targeted action on those who are actually at risk, Maori and Pacific peoples, and proper punishment for those who perpetrate crimes against children are good steps in trying to combat child violence.

State propaganda advertising other socialist nut bag legislation recently passed, the anti -smacking law has recently started. Various Z grade celebrities like Alison Mau and the lefty sniveling "I know better than you," Russell Brown, listed by himself as some kind of journalist, spank themselves silly in print on TV and radio, giving the great unwashed public the benefit of their superior knowledge on child rearing and telling you therefore that your way is wrong, wrong, wrong- insert image of a wagging finger here.

This latest attack on the family is merely the continuation of the state control that has been engineered from the inception of this socialist Labour Government when it took control of the countries finances in 1999.

The overriding focus for Labour in its 8 long years has been law passed to seize control, piece by piece of every individual’s ability to run their lives in an independent way, self sufficient and self reliant.

Labour wants us to rely on the state as much as possible.

The list of Government interference in our lives is a long one.

Labour has passed the anti-smacking bill, the thrust of this law is that parents no longer have the right to challenge or punish children for doing wrong in anyway. If they do their children will be taken away and the parents punished by child welfare agencies. Screwy huh?

Labour removed the choice of individuals to smoke in pubs and restaurants and at the same time private property rights and profits of business owners.

Labour has interfered with food in schools by making such treats as pies and chips, who all sensible people know should only be eaten sparingly.

Labour have interfered in child minding and pregnancy by introducing paid maternity leave, to be paid by taxpayers and employees thereby forcing those families who would pay for their own children’s upbringing to work longer hours to pay the increasing taxes for the scheme.

Labour’s “Working for Families” Welfare package have effectively put another 500,000 individuals on welfare and therefore at the mercy and control of those who hold the purse strings

Labour have brought Railways and Air New Zealand under the state flag and TVNZ has moved towards more state control and failed miserably.

Labour have started a State bank, “invested” millions of taxpayer dollars and have yet to get a return and never will.

I hate to “Labour” the point but the thirst for control by these individuals is monotonous in its regularity.

Along with the looney laws, we have had a mountain of Government propaganda and spin in all the media about what should: eat,smoke, read, drink and how to raise our children and what our families should look like. We are constantly bombarded with these messages to the point that the more gullible and moronic amongst us start to believe what they see, read and hear.

Stalin and Hitler used these same forms of Government spin to get their message across. We are not at this point yet but follow the story of the last 8 years to its logical end.

While all the energy by this government being put into making New Zealand a nanny state is wasted, this countries economy, education, health slides further and further towards oblivion.

The trouble with all this finger wagging and State control is that its logical conclusion would be a state employee following every individual around constantly telling them what to and what not to do. Think that this can’t happen?

The undercurrent and aim of this Socialist Labour Government is to have effective control of everything that an individual does. Private enterprise and self reliance is an anathema to them and not to be encouraged at all, we only have to look at their attack on John Key and his success in life to see where this filthy lot are coming from.

The ultimate in socialist control and for the reigns of power to be held in their hands in perpetuity, is the Electoral Finance Bill, which would, if passed, allow the incumbent to spend taxpayers money promoting government legislation to buy an election while opposing groups to government will be restricted to $60000.00 and not be allowed to criticize government in an election year.

These pigs in the taxpayer trough must be stopped before they end up in bed next to us.

That is a scary thought.


c Darren Rickard 2007

Monday, September 10, 2007

New Zealand Retailers ring up costs not Tills.

With a few noticeable exceptions, this seasons profit round has been flat to poor. Not a surprise though considering the state of the economy and increased business costs being lumbered onto business by this socialist, business hating Labour Government.

One industry that has fared particularly badly is the retail sector.

The countries largest retailer, The Warehouse(WHS) is likely to book a flat net profit of around NZ$96 million, up from $95.3 million last year.

Hallenstein Glasson(HLG) and Pumpkin Patch(PPL) are soon to report their profit results while Briscoe Group(BGR)reported a just over 12 % drop in half-year net profit to $10.53 million Friday 7 September.

Hallenstein Glasson and The Warehouse release profit figures Friday 14 September, and Pumpkin Patch is releasing its results on Monday 17 September. Pumpkin Patch's profit will be affected mostly by the weaker US dollar and stronger Kiwi as profits from foreign shores come back to New Zealand where the company is based.

Smaller retailers like Postie Plus Group (PPG) and the fast food operator Restaurant Brands (RBD) are likely to be similarly affected. RBD is likely to post an improved profit but coming from a loss last reporting season that wont be hard to achieve.

The worst performer has been Hellaby Holdings, they booked a loss of more than $9 million recently. This has been mainly due to poor results from their BBQ Factory chain which they overpaid for 2 years ago and are about to start litigation against former owners the ASB Bank.

Micheal Hill(MHI) the Jeweller has done well this last year, with increased sales and profit. They have benefited from expansion but they have also been one of the few retailers that have done well out of the lower $US dollar , making their core cost, gold, considerably cheaper.

The retail sector has had pressure in general from a multiple shot at the bottom line from increased operating costs. Labour's raising of the minimum wage, parental leave costs, increased holidays and a myriad of other central and local government compliance's have hit retailers and other business sectors with a whiplash effect and it is not about to end soon.

Kiwisaver compliance and the removal of youth rates will hit this sector again in the coming year/s.

Retailers have also been hit by petrol, power and interest rate rises, directly on their business operating side and again with consumers having less to spend on their goods and services because of the rises in these costs.

This slump isn't going to go away anytime soon but it is not terminal for the strong retailers.

A good opportunity exists now for those long term investors to buy stock in those companies that you have had your eyes on but were maybe too expensive to warrant a buy for now their stocks have been beaten down to a level that looks a lot more attractive.

Disclosure: I own PPL shares


c Share Investor 2007